An economic recession is one of the worst things that can happen to any business. Most CEOs understand this because they have had hands-on experience. But it may all sound like jargon for many startups less than 10 years old. Fortunately, people have just gone through the COVID-19 pandemic, which is an example of an economic recession. Businesses came to a standstill, and many doors were closed. Some companies have not recovered from the effects of the pandemic, while others closed permanently. So, how do you recession-proof your company?
The first step in recession-proofing your business is to build an agile workforce. You don’t want to rush into laying off your team that you spent a lot of resources to put together and train to align with your company goals. It may not be the same when you want them back. Besides, an economic recession does not last forever. It ends, and you will spend more resources and time putting them together. So, what should you do to control losses?
“In an attempt to control the losses of my staffing company in 2002, I started looking for a platform to centralize information, enhance efficiency and boost profitability," said Giridhar Akkineni, CEO of AkkenCloud.
You can also secure capital before you need it. During an economic recession, cash flow will not be as usual. Stockpiling some cash will help you remain afloat when the worst happens. CEOs understand this because business slows down. You can have dead stock or may not source your products as you usually do. That is where your stock cash comes in to keep things moving.
You can talk to your partners and suppliers if you can’t get finances in advance. Something you already know or expect will not hit hard during the eventuality. It is the same logic here. Tell any stakeholder about the future of the company and all uncertainties, even if it means giving bad news. It also prepares them for the same thing because they may face similar challenges. Your role is to ensure they are on the same page. That will also help you identify pitfalls in time and address any rising issues.
Before you proceed with that big investment, think again. It may seem a remarkable milestone for your company. But you may live to regret that decision when faced with an economic recession. It is a good idea when the business is booming, but disaster could strike when you have just signed a new commercial lease. Suppose you have bought a truck on credit to help you ferry products or raw materials. What do you do when the business stops moving? Do not make any big investments if there is a looming economic recession. Instead, build a cash reserve to help you get to the other side.
Lastly, take control of your cash flow. Know your numbers like the back of your hand and create a clear vision and profit plan for the future. Know when to push or pull back as events unfold.
Giridhar is the CEO of AkkenCloud, an all-in-one SaaS platform for the staffing industry. He has experienced this all when building the company and getting through hard times. His advice is from his real-life experience and how he overcame the challenges. Giridhar remembers the 2008/2009 recession and the COVID-19 downturn as his toughest challenges. But that did not stop him from helping hundreds of staffing companies with thousands of users successfully running their businesses on AkkenCloud's SaaS Platform.
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